Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

A critical financial accounting skill is the ability to read, analyze, and to make actionable determinations

from any financial statement. Business leaders gain valuable information from the analysis of their financial statements, the competitors' financial statements, and comparison to industry averages.

The Situation

You are the CFO of an up-and-coming athletic company, which desires to someday become the #1
athletic company in the world. Strategically, the company uses Nike and Under Armour as their key
competitor benchmarks. Your CEO is a big believer in learning from the competition and is requesting two
things from you regarding Nike and Under Armour's most recent annual reports.

Part One: The Executive Summary

No more than 2 pages (can include an appendix with additional graphs, charts, and tables).

1) Competitor Strategies

• Identify and explain one key strategy from each company that the company explicitly
discussed in the annual report.

2) Net Income Margins

• What are the net income margins for both companies?

• How do they compare?

• Who achieves the higher net income margin? Why?

• Tip: Analyze the major cost structure line item in the income statement (COGS, SG&A,
interest, other, and taxes) as a percentage of net sales to identify reasons for better net

income margins. Identify and comment on the differences you see. You may not know

why a particular cost item like COGS is higher or lower, but your CEO only seems
interested in knowing which cost structure items are higher or lower for each company.

3) Inventory Management

• Who has more inventory in terms of days of inventory last year?

• What are their respective 3-year trends for days of inventory?

• What does FIFO/LIFO mean, and which accounting approach does each of the
companies use to value their inventory? (The accounting approach can be found in the
Notes section.)

4) Cash is King

• How much net cash from operations did each company generate last year?

• In laymen's terms, how is each company spending their cash with respect to

reinvestments in the business, changes in debt, and returning money to shareholders?

5) Liquidity

• How is the current ratio calculated?

• How do the companies compare in terms of the current ratio, and what are their respective 3-year trends?

• Does their current ratio indicate that either (or both) of these companies could go bankrupt soon? Explain

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91767272
  • Price:- $50

Priced at Now at $50, Verified Solution

Have any Question? 


Related Questions in Basic Finance

Assume the followingerm 7rf 2expected risk premium on

Assume the following: E(rM) = 7% rF = 2% Expected risk premium on Boeing stock = 7% What is the expected return on Boeing stock? Show your work

1 what factors must one consider when deciding on the

1. What factors must one consider when deciding on the appropriate underlying asset for a hedge? 2. For each of the following hedge termination dates, identify the appropriate contract expiration. Assume the available ex ...

Target wants to sell some 25-year 1000 par value bonds with

Target wants to sell some 25-year, $1,000 par value bonds with coupon interest paid annually. Each bond has 45 warrants attached to it. The yield of the firm's bonds with no warrants is 16%. The market value of each warr ...

How does a conversion provision on a debt obligation

How does a conversion provision on a debt obligation provide an option to the investor? If the yield on a Treasury security is 3% and that of a similar-maturity municipal bond is 2.5%, what is the muni-Treasury yield rat ...

The hudson corporation makes an investment of 24000 that

The Hudson Corporation makes an investment of $24,000 that provides the following cash flow: Year Cash Flow 1................ $ 13,000 2................ 13,000 3................ 4,000 a. What is the net present value at ...

1 behavioral measures frequently have the advantage of

1. Behavioral measures frequently have the advantage of reducing participant reactivity. Since they can capture the behavior of individuals more honestly, why are they so infrequently used in behavioral research? 2. Cons ...

Consider the following listing for 10-year treasury note

Consider the following listing for 10-year Treasury note futures on the Chicago Board of Trade. One futures contract for Treasury notes = $100,000 face value of 10-year 6% notes. a. If on this day you bought two contract ...

What is the expected relationship between dividend payout

What is the expected relationship between dividend payout levels and the growth rate and availability of positive-NPV projects, under the agency cost model of dividends? What about the expected relationship between divid ...

1 why do consumers usually prefer fixed-payment loans to

1. Why do consumers usually prefer fixed-payment loans to simple loans when buying cars and houses? 2. What is a STRIP? Why were STRIPS created? What need were STRIPS intended to fill? 3. When corporations borrow money f ...

Why are the up and down parameters adjusted when the number

Why are the up and down parameters adjusted when the number of periods is extended? Recall that in introducing the binomial model, we illustrated one- and two-period examples, but we did not adjust the parameters. What i ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro